Reliance Power wants Andhra Pradesh government to scrap PPA on power project

Coastal Andhra Power Limited (CAPL), a subsidiary of Reliance Power Limited, has written a letter to the Andhra Pradesh government requesting it to cancel the power purchase agreement (PPA) it had signed for its 4000 MW power project, a non-starter, at Krishnapatnam.

The official further said the government was yet to take a decision on the issue.

Coastal Andhra Power Limited (CAPL), a subsidiary of Reliance Power Limited, has written a letter to the Andhra Pradesh government requesting it to cancel the power purchase agreement (PPA) it had signed for its 4000 MW power project, a non-starter, at Krishnapatnam. A senior government official said Reliance Power is willing to surrender its 2,600 acres of land in lieu of which the company wants its bank guarantees back and also revoke liquidated damages besides land cost of Rs 226 crore.

“Reliance Power Ltd (RPL) had requested the Andhra Pradesh Southern Power Distribution Company Limited (APSPDCL), as the lead procurer ofKrishnapatnam UMPP (ultra mega power projects) to scrap the PPA and revoke the claim of liquidated damagesamounting to Rs 400 crore and initiate the action for release and return of bank guarantees of Rs 300 crore by all procurers to RPL,” the official told PTI quoting the letter.

The Reliance Power, through its letter, informed that CAPL would return the land to the State government on the condition that AP DISCOMs shall release and return the bank guarantee amount of Rs 47.62 crore, the official said. It also requested the government to revoke the claim of liquidated damages amount of Rs 63.50 crore of AP DISCOMs as against the total claim of LD amount of Rs 400 crore by all procurers and payment of Rs 226 crore towards the land cost by GoAP,” according to the official.

The official further said the government was yet to take a decision on the issue. Though the current market price of the land is much higher, the company said it would not claim that price with an intention to reach an amicable settlement and to avoid prolonged litigation in the matter.

The CAPL acquired approximately 2,600 acres of land in year 2OO7 and spent about Rs 1,050 crore on development of Krishnapatnam UMPP, out of which nearly Rs 500 crore has been spent towards development of land, boundary walls, roads and drains among others.

CAPL was awarded the Kishnapatnam UMPP in 2007 and the power produced by the project would be shared by five states -Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu and Karnataka. Earlier it was four states. Now, Telangana was added as it was carved out of Andhra Pradesh in June 2014.

Southern Power Distribution Company Ltd, a Andhra Pradesh government power utility, on behalf of power procurers of rest of the States had, in 2012, issued a notice to CAPL that it would encash the bank guarantee of Rs 300 crore as penalty besides terminating the contract as the project work has been stopped for more than three months. Citing high coal prices from Indonesia among others, the CAPL stopped the UMPP project work. The tariff for the project was fixed at Rs 2.33 per unit.